Friday, January 28, 2011

I’ve been writing about my search for suitable floating-rate debt securities to which I can allocate a part of my debt portfolio. I’ve previously posted some thoughts about floating-rate (FR) equity preferred stocks (link), particularly MET-A and HBA-D, and exchange-traded debt securities (link), particularly the exchange-traded bond PFK and the trust preferred issue UBS-D.

I’ve come to like the closed end fund GFY run by Legg Mason. It invests, with a pledge of at least 80% of assets, in variable rate debt, such as mortgage-backed securities, IG and high yield corporate bonds, senior loans, and emerging market debt, and derivatives related to these securities; no FR equity preferred stock, however. Much of this portfolio, about 45% as of last fall, is as expected below investment grade. I like the picture from the last annual report (link), dated September 30, 2010: portfolio earned interest and dividends well in excess of the CEF’s distributions, specifically an impressive 134%; solid positive capital gains and net from derivatives; a very decent amount of undistributed net investment income on the books; and no return of capital. To my read, about 82% of its net realized gain came from portfolio interest and dividends, which I like, with only the remaining 18% from net capital gains and derivative, swap, and currency transactions. The Legg Mason GFY "Fact Card" (link) lists a security weighted average life of 5.6 years. As of yesterday it pays a monthly distribution at an annualized rate of 4.1% and trades at a very attractive 8.4% discount to net asset value. Interestingly it does not employ leverage, despite being the kind of fund -- one with a variable rate portfolio that could maintain an interest rate spread over borrowed capital as interest rates rise -- where one might expect it and like to see it. One limitation – it’s a fairly small fund with relatively low trading volume. What I see as the risk/reward ratio is attractive for a modest investment, and I’ve begun accumulating some shares on dips.

I’m an individual investor with no background in finance or securities, writing things down to help organize and clarify my thinking. Of course, nothing I say constitutes investment advice of any kind – merely an account of my personal observations and decisions; I do not vouch for the accuracy of any representation -- every investor must do his/her own due diligence. My core portfolio is a conservative and diversified mix of equity and debt mutual funds, ETFs, and some closed-end funds (CEFs) across investment styles, management firms, and accounts, and I invest a relatively small amount somewhat more aggressively in the perhaps ultimately futile personal pursuit of alpha.

Monday, January 17, 2011

The bullets of the madman had barely stopped flying in Tucson earlier this month when many prominent liberals rushed to blame the tragedy on conservatives, despite not only the absence of a shred of evidence of such but despite early anecdotes that in fact he was an atheist, a left-wing pothead, and an anarchist, even as if had the shooter held conservative political views they could possibly be blamed for mass murder. We’ve seen this despicable tactic from liberals many times before, of course – from the recent Times Square bombing attempt, to the Oklahoma City bombing, to the assassination of President Kennedy.

This recent disgraceful behavior offers yet another clear look into the disturbed and hateful souls of so many in the intellectual vanguard of modern liberalism. Seeing their hoped-for apotheosis of liberalism, the Obama presidency, flounder and seeing most voters in the recent elections reject the liberal agenda, liberal opinion leaders are angry, desperate, and unhinged. And they are not troubled to accuse conservatives of being moral accomplices to mass murder, for facts and truth don’t matter to the socialist, collectivist cause – only that “truth” that advances their social deconstruction of an America predicated on individual liberty, personal accountability, limited government, and constitutionalism.

I’ve collected some noteworthy responses to the deranged liberal smears that can serve me as continual reminders of the true purpose and character of modern American so-called liberalism, the antithesis of what the term meant years ago and should always have stood for.

Glenn Harlan Reynolds in the Wall Street Journal (link): ‘To be clear, if you're using this event to criticize the "rhetoric" of Mrs. Palin or others with whom you disagree, then you're either: (a) asserting a connection between the "rhetoric" and the shooting, which based on evidence to date would be what we call a vicious lie; or (b) you're not, in which case you're just seizing on a tragedy to try to score unrelated political points, which is contemptible. Which is it? … I understand the desperation that Democrats must feel after taking a historic beating in the midterm elections and seeing the popularity of ObamaCare plummet while voters flee the party in droves. But those who purport to care about the health of our political community demonstrate precious little actual concern for America's political well-being when they seize on any pretext, however flimsy, to call their political opponents accomplices to murder.”

Jay Nordlinger at National Review Online (link): ‘After the Kennedy assassination, John Tower and his family had to evacuate to a safe place. The early word was that right-wingers had killed the president. Tower was associated with Goldwater for President. There were death threats against his family. It transpired, of course, that a left-wing nutjob who had “defected,” briefly, to the Soviet Union was the killer. A liberal was quoted as saying, “Now our grief can be pure.” …. If an Islamist blows up or guns down 50 people, shouting “Allahu Akbar” as he does it, you’re not supposed to say that the act has any broad implications at all. It is simply an individual act, end of story. But if a young psychotic in Arizona kills a lot of people, we’re supposed to examine the state of Sarah Palin’s soul.’

Andrew Klavan at City Journal (link): ‘… [T]he Left’s sudden talk about incendiary political rhetoric in the wake of the Arizona shooting isn’t really about political rhetoric at all. It’s about the real-world failure of leftist policies everywhere— … leftists [are] starting to lose control of the one weapon in which they have the most faith: the narrative. The narrative is what leftists believe in instead of the truth. If they can blame George W. Bush for the economic crisis, if they can make Sarah Palin out to be an idiot, if they can call the Tea Party racist until you think it must be true, they might yet retain power in spite of the international disgrace of their ideas. .… call it Narrative Hysteria: a frantic attempt to capitalize on calamity by casting their opponents, not merely as racist or sexist or Islamophobic this time, but as somehow responsible for an act of madness and evil. Shame on them.

Roger Kimball at National Review Online (link): ‘What we have here in the tortured left-wing effort to enlist the ghastly Arizona shootings into their anti–Tea Party campaign is yet another example of political correctness on the march. The great irony … is that all this vitriol should be marching under a banner called “liberalism.” There is nothing liberal, nothing having to do with freedom, about it. It is all about control: power in the hands of a nomenklatura and submission visited upon you and me, my friends. It’s the good old strategy of Lenin, dusted off and infused with some new names.’

George F. Will at the Washington Post (link): ‘Let us hope that … [this] is the last gasp of the generation of liberals whose default position in any argument is to indict opponents as racists. This McCarthyism of the left - devoid of intellectual content, unsupported by data - is a mental tic, not an idea but a tactic for avoiding engagement with ideas. It expresses limitless contempt for the American people, who have reciprocated by reducing liberalism to its current characteristics of electoral weakness and bad sociology.’

Andy McCarthy at National Review Online (link): ‘Very simply: The Left likes Islam and sympathizes with the Islamist critique of America, while it seethes with contempt for the likes of Sarah Palin, Rush Limbaugh, and any person or institution that can serve as a symbol of conservatism or bourgeois American life. Consequently, any heinous act that can be contorted, however counterfactually, into a condemnation of the Right will be exploited for that purpose. Conversely, there is to be quick rationalization for, and then studious suppression of, any shameful episode that is too clearly traceable to a leftist cause célèbre — Islam, a movie pining for George W. Bush’s assassination, ghoulish wishes that Clarence Thomas or Dick Cheney will meet swift and painful deaths, or Senate Democrats’ comparing U.S. troops to Nazis, Soviets, Pol Pot, or terrorists…. There is no point debating any of this. Two years ago, we were still being told dissent was the highest form of patriotism; now it’s the root cause of murderous rampage. Modern leftists are tacticians. They’ve convinced themselves of the rightness of their cause, obviating the need to be consistent or faithful to facts in any single episode. For them, it’s all about how the episode can be spun to help the cause. That’s worth understanding, but not debating.’

Peter Wehner at Commentary Magazine (link): ‘What is on display is a cast of mind in which facts and reality are secondary to storylines and narratives. The aim is not truth; it is to advance The Cause. It is also about cynical exploitation. As one veteran Democratic operative told Politico, the Obama White House needs to “deftly pin this on the tea partiers” just as “the Clinton White House deftly pinned the Oklahoma City bombing on the militia and anti-government people” in 1995…. It is all quite sick, really. Not a few liberals are attempting to use a human tragedy to advance an ideological agenda. They are using dead and broken bodies as political pawns. The blood was still flowing from the gunshot wounds of slain and wounded people in Tucson as liberals began an extraordinary and instantaneous smear campaign. It will end up making our political discourse even more angry and toxic. I was naïve enough to be surprised at what has unfolded in the last 48 hours. The cynicism and intellectual corruption on the left is deeper than I imagined.

Charles Krauthammer in the Washington Post (link): ‘Rarely in American political discourse has there been a charge so reckless, so scurrilous and so unsupported by evidence.’

Daniel Henninger in the Wall street Journal (link): ‘What happened in November [the widespread electoral repudiation of liberal policies] has to be stopped, by whatever means become available. Available this week was a chance to make some independents wonder if the tea parties, Sarah Palin, Rush Limbaugh, Glenn Beck and Jared Loughner [the Tucson mass murderer] are all part of the same dark force. Who believes this? They do. The divide between this strain of the American left and its conservative opponents is about more than politics and policy. It goes back a long way, it is deep, and it will never be bridged. It is cultural, and it explains more than anything the "intensity" that exists now between these two competing camps. The Rosetta Stone that explains this tribal divide is Columbia historian Richard Hofstadter's classic 1964 essay, "The Paranoid Style in American Politics." After Hofstadter, the American right wasn't just wrong on policy. Its people were psychologically dangerous and undeserving of holding authority for any public purpose.’

Peter Wehner, again, at Commentary Magazine (link): ‘The left has decided to build on the slander that conservatives were moral accessories to murder. This week they are using the death of six innocent people in Arizona as a means to advance their policy agenda — even though that policy agenda had nothing on earth to do with the terrible events in Tucson .… And so the forthcoming health-care debate is now being framed in the context of the Tucson massacre (the not-so-subtle argument is that health care contributed to the “climate of hate” that the left still wants to insist contributed to the violence on that awful day)…. What we’re witnessing among some liberals are minds that are so thoroughly and completely politicized that they will use any human tragedy, create any set of arguments, and invent any narrative they can in order to advance The Cause…. [A]pparently, some on the left are so consumed by politics that it tints every lens they look through; it impacts every act in life; and it colors every living, breathing thought they have.’

Monday, January 3, 2011

Robert Andrews, a Democrat Congressman from New Jersey, was a guest on today's Bill O"Reilly show and was introduced as one of the "co-authors" of Obamacare. He was asked to respond to the announced Republican plan to hold a repeal vote on the law very soon as one of the first activities of the new Congress. This guy said, and I quote, "I think it's wrong to focus on healthcare rather than jobs."

This is too rich, too ridiculous. In fact, this guy had such a flat affect even he couldn't muster enthusiasm for his argument, if one can even call it that. For two years the Democrats have focused primarily on their health care scheme, to the detriment of job creation, and now this guy says it would be wrong to focus on health care rather than jobs. He avoids defending the substance of the bill -- he just doesn't want to talk about it.

For the past two years, their health care scheme was the top priority for Democrats instead of jobs, the economy, and Islamic terror, to name just a few other things, and the voters responded with the Great Repudiation of 2010. Now congresssional Republicans, many of whom were newly elected as much as anything else because of their opposition to Obamacare, want to try to repeal what they think is not only a very bad attempt at health care "reform" but a great harm to the economy and the Constitution as well, and all this guy Andrews can muster is to knock them for not focusing on "jobs". This is appparently the Democrat approach to defending Obamacare -- change the subject to jobs. Any problems with anything we've done or haven't done -- why worry about that? Focus on jobs, jobs, jobs.

A great impediment to more job creation IS Obamacare. This Dem tactic is pathetic. New Jersians and the rest of us deserve much more.